Russia's central bank keeps key interest rate at 20%

Friday 18 March 2022 14:37 CET | News

Russia's central bank kept its key interest rate at 20% on 18 March following an emergency rate hike in late February and warned of an imminent spike in inflation and a looming economic contraction.

The central bank board met on rates after raising the key rate from 9.5% on 28 February to 20% to support financial stability when the rouble crashed to record lows as the West imposed sanctions against Russia over its actions in Ukraine.

The bank said in a statement Russia was entering ‘a temporary but inevitable period of increased inflation’, while flash indicators suggested a deterioration in the economy that will shrink in the coming quarters. The central bank did not give inflation or economic forecasts for this year, saying it aimed to return inflation to its 4% target in 2024.

Economists polled by the central bank last week expected the economy to shrink 8% and inflation to reach 20% in 2022. Annual inflation in Russia accelerated to 12.54% as of 11 March, its highest since late 2015, with the weakening rouble sending prices soaring amid unprecedented Western sanctions.

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Keywords: central bank, regulation, financial institutions, financial sanctions, Russia Ukraine War, interest rate
Categories: Banking & Fintech
Countries: Russian Federation
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